Bundled PaymentValue Based Purchasing

andACOs

Presented by:Rusty Ross

Mike ScribnerRhonda Durden

Session ObjectivesDiscuss the Centers for Medicare and Medicaid

InnovationBundled Payments and the ModelsPartnership for PatientsValue Based PurchasingACOsClinical Quality and Integration

Health Care TrendsThe era of unchecked Fee For Service is Ending

Bundled PaymentsACOsLimited Provider NetworksIncreased Medical ManagementHigh Deductible Health Plans

Quality Measurements are going to be an increasing part of the pictureHealth GradesPhysician Quality Reporting Initiatives (PQRI)Move towards population management and disease

management

Bundled PaymentsCMS Innovation Initiated Voluntary ProgramAccepting applications for four broadly

defined models of care.  Three models involve a retrospective bundled

payment arrangement, and one model would pay providers prospectively. 

By giving providers the flexibility to determine which model of bundled payments works best for them, it will be easier for providers of different sizes and readiness to participate in this initiative.

Retrospective Payment BundlingIn these models, CMS and providers would set a target

payment amount for a defined episode of care.  Applicants would propose the target price, which would

be set by applying a discount to total costs for a similar episode of care as determined from historical data. 

Participants in these models would be paid for their services under the Original Medicare fee-for-service (FFS) system, but at a negotiated discount. 

After the conclusion of the episode, the total payments would be compared with the target price. 

Participating providers may then be able to share in those savings.

Retrospective Payment Bundling Providers have the flexibility to choose whether to define an episode of care as:

•Hospital services provided to a beneficiary during an acute inpatient stay, where physicians are partners in improving care (Model 1);•Hospital, physician, post-acute provider, and other Medicare-covered services provided during the inpatient stay as well as during recovery after discharge to the home or another care setting (Model 2); or•Hospital, physician, post-acute provider, and other Medicare-covered services beginning with the initiation of post-acute care services after discharge from an acute inpatient stay (Model 3).

In models 2 and 3, components of the bundle may include clinical laboratory services and durable medical equipment.

Prospective Payment Bundling Under Model 4, CMS would make a single,

prospectively determined bundled payment to the hospital that would encompass all services furnished during the inpatient stay by the hospital, physicians and other practitioners. 

Physicians and other practitioners would submit “no-pay” claims to Medicare and would be paid by the hospital out of the bundled payment.

Value Based Purchasing Overview

The Affordable Care Act (ACA) of 2010 mandated the implementation of an inpatient hospital value-based purchasing program (VBP).

A pay-for-performance program that will link Medicare payment to quality and patient satisfaction performance.

Implementation begins federal fiscal year 2013 (October 1, 2012).

Implementation of VBP would not increase Medicare spending.

OverviewThis program does not apply to:Psychiatric facilitiesRehab facilitiesLong term care facilitiesChildren’s HospitalsCancer HospitalsHospitals in Maryland and Puerto RicoCritical Access Hospital and small rural

hospitals with insufficient numbers of measures

Value Based PurchasingTo implement VBP program that assesses

hospital quality performance using quality measures from three domains:Clinical process of carePatient experience of care (HCAHPS)Patient outcomes* (mortality)

*Outcomes domain would not be part of the FFY 2013 VPM Program

Value Based Purchasing17 Clinical Measures

3 AMI measures3 HF measures4 PN measures7 SCIP measures

3 for SCIP 4 SCIP measures that represent Healthcare-

Associated Infections

Eight dimensions of HCAHPS

Value Based PurchasingThe initial performance period is: July 1,

2011 through March 31, 2012 for the FY 2013 payment determination

This will be compared to their performance baseline of July 1, 2009 through March 31, 2010

Overview of CalculationsHospitals could earn up to 10 achievement

points for each useable process measure for the achievement of certain quality standards.

CalculationsClinical process of care domain is weighted at 70% and the patient experience of care is weighted at 30%.

Timeline:

• Hospitals will receive their preliminary VBP score no later than August 1, 2012, via CMS QualityNet accounts.

• Base-operating DRG will be reduced by 1 percent beginning October 1, 2012.

• Hospitals will learn their final VBP score on November 1, 2012, and have 30 days to review and submit corrected information.

• VBP incentive payments will begin January 1, 2013, with retroactive adjustments for any FFY2013 discharges paid prior to that date.

Accountable Care Organizations

Final Rule

What is an ACO? (In case you have been living under a rock…)

Accountable Care Organization (ACO)Means a legal entity that is recognized and

authorized under applicable State law;Identified by a Taxpayer Identification Number

(TIN);Comprised of an eligible group of ACO participants

that work together to manage and coordinate care for Medicare FFS beneficiaries; and

Have established a mechanism for shared governance that provides all ACO participants with an appropriate proportionate control over the ACOs decision making process.

Eligible EntitiesACO professionals in group practice

arrangements.Networks of individual practices of ACO

professionals.Partnership or joint venture arrangements

between hospitals and ACO professionals.Such other groups of providers of services

and suppliers as the Secretary determines.

Assignment of BeneficiariesAssigned based on “plurality” of primary care

services with a PCP in an ACO.- Based on allowed charges, not a simple count

of services.Assigned retrospectively for calculating

savings.- CMS will provide list of beneficiaries.

PCPs can only participate in 1 ACO.

ACO – Final Rule changesThe final rule no longer require that all ACOs risk losing money. Providers can choose to participate in an ACO and share in Medicare

savings without risk or take on more risk for the chance to earn larger savings.

The final rules also reduced the number of quality measures from 65, a number that many providers called redundant and costly, to 33.

A major change was the inclusion of community health centers and rural health clinics.

The final rules allow these providers to lead ACOs, a process that would have been difficult under the previously proposed rules.

CMS has also given providers more time to prepare for the launch of ACOs.

The initial response to these changes has generally been favorable, but with the vast amount of information being released, organizations will likely take months to synthesize all the aspects of these new rules.

ACO – Final Rule ConcernsTechnology

50% of PCPs in ACO must meet “Meaningful Use” Criteria for an EHR

ACOs Need to aggregate patient data from different provider systems (HIE) and have analytical skills to mine, review and act on the data (Data Informatics)

Not a cheap or Quick Implementation and we are not thereBeneficiary Limitation

Beneficiaries can seek care outside an ACO where they are assigned

Not clear on if CMS will allow for beneficiary inducements to keep them in network

No Stick….No Carrot…No Nothing

ACO – Final Rule ConcernsFinancial

Costs are large to start an ACO but becoming more flexible.Financial returns are measured by CMS after the fact based

upon their risk adjusted data.Shared Savings limited (greater opportunities if downside risk

shared).Initial results for Physician Group Project on which ACOs are

based has had mixed results and negligible savings (approx. $300 per member) with some groups having no savings after large cost expenditures.

This is complicated stuff……At this point, are the limited financial gains worth the

large start up costs and regulatory risk?

ACO – Final Rule Concerns

PCPs can participate in only 1 ACO. What if it’s not yours?

50% of participating PCPs must hit meaningful use by end of 2012.

Can’t add new physicians to ACO during Agreement period.

ACO vs. CHPsMore activity in ACO-look alike plans, such as

Community Health Plans around the country.New rules are better but so far not likely to

spur much change in ACOs themselves.Commercial/CMO/MA plans chomping at the

bit to use these mechanisms.

ACOs and CHPsWill drive the following:

Scramble to buy up primary care physicians.A push to connect providers through health

exchanges: Allowing better care coordination Real outcomes data for the rural providers Most providers are unsure what that data would

reflectPay for performance mechanisms….moving slowly

now, will gain traction.

Flavors of ACO/CHPs we see:Large territory providers partnering with

large insurance carriers.Large urban physician groups partnering

with carriers and other downstream costs. Some talk of groups of rural providers with

enough potential membership with carriers.

PCPs are KeyPrimary care physicians are key going forwardTheir role as gatekeepers will be funded more

substantially.It is probable that they will take a more active

role in managing downstream costs. It will be in their best interest to know if their

referrals are made to cost effective providers and avoid duplicative testing, etc.

A shift in power in the market will likely be experienced to acknowledge their role in the market.

Revenue GrowthThe goal is for fee-for-service pricing mechanisms to be going away or deemphasized in the future.

Therefore, growth strategies built around “add ancillary services or another doc” solely may not drive additional growth in the future.

In the future: The key to revenue growth may be to coordinate care

and manage costs better. More IT/clinical decision support resources will be

needed, period.

Know where you standWhat is your VBP score?What is the state of ACO/CHP in nearest

tertiary facilities?Understand your referral flow. Where does

care go from your market?Where are the missing links in PCP network?

Not just in town, but between you and the next larger facility.

Information Technology

Investing in Electronic Health Records Technology PCPs Specialists Hospitals

Linking providers through a Health Information Exchange (HIE) within system or as part of a larger regional entity (likely).

Reviewing Current Quality Measures and Developing Clinical Pathways.

Monitor Provider performance to pathways through system reports.

Thank you for joining us todayPlease contact any of our presenters after the presentation if you have additional questions:

Rusty Ross – Morris, Manning & Martin, LLPMike Scribner – Strategic Healthcare PartnersRhonda Durden – Emanuel Medical Center